The total corporate social responsibility (CSR) spending by the top 500 companies in the country since the applicability of mandatory CSR in 2014 is likely to cross Rs 500 billion by March 2019, said a report.
The CSR compliance is also likely to improve and fall in the range of 97 to 98 per cent by financial year 2019-20, according to a research done by development sector platforms CSRBOX and NGOBOX.
"Mandatory CSR has gradually formalised the corporate philanthropy with emphasis on impacts on the ground. With on an average Rs 120 billion funding annually, there is a lot that can be done in education, healthcare and rural development areas," said Bhomik Shah, chief executive officer, NGOBOX and CSRBOX.
The government in 2014 made mandatory for companies to spend 2 per cent of their three-year average annual net profit on CSR activities in each financial year, starting from FY15. The norms are applicable to firms with at least Rs 50 million net profit or Rs 10 billion turnover or Rs 50 billion net worth.
The report also revealed that the top 20 corporations command over 45 per cent of the prescribed CSR in the country.
In addition, the top 500 companies, which contribute to over 90 per cent of the total CSR spend, are estimated to spend over Rs 110 billion on social initiatives in FY19, the report said.
In terms of sectors, education is expected to be the most favoured area of CSR investment in the coming years.
In terms of states, Maharashtra receives the biggest chunk of the total CSR fund spent in the country, followed by Rajasthan, Karnataka and Gujarat, together accounting for one third of the country's total CSR spends, the report said.
The north-eastern states of Nagaland, Meghalaya, Mizoram and Tripura have received lowest CSR funding so far.
The report revealed that an upward trend was seen year after year when it comes to CSR compliance by companies, however, the size of funding for each initiative has shown downward movement, suggesting the fact that firms are looking at more number of projects to diversify their CSR portfolio.
It said that if the new recommendation by sub-legal committee on CSR, constituted by the ministry of corporate affairs in April 2018, is accepted by the government, then companies will not be allowed to carry forward the unspent CSR fund, which will boost the CSR compliance.